IMO Sikkim and Kathmandu will take some time to add significantly to the topline. However Daman, will be a cash guzzler from the very first day itself owing to its location. But given the current political condition in the country Daman license doesn’t seem to be a reality anytime soon. Moreover cost sharing with the patrons does not seem to be a problem as most of the folks visiting casinos belong to the rich class and even the younger middle class seems open to pay up for luxury.
Some wrong assumptions here! e.g. all Deltin suites clients will migrate to offshore is a flawed thinking. Many VIPs want exclusive gaming areas who wouldn’t like the idea of going to a public place like casino vessels. Moreover, if somebody has to go to offshore centre, they might book their stay at somewhere else so Delta stands to lose high end hospitality clients. I think Delta would need to exit some hospitality assets as well if they want to surrender some onshore licenses. Loss of footfalls is given in any scenario along with higher impact of taxes. However, if other marginal casinos also decide to exit some traffic might move to offshore but even Casino Pride will be big beneficiary. The situation is in flux and would be too early to estimate numbers. I think FY19 will be largely a no earnings growth year for Goa operations. Nepal is a highly competitive place for gambling and Sikkim has smaller operations that will take few months to ramp up. Only silverline is online gaming which has clear blue sky to grow.
I agree with most of your comments . But i dont see online gaming having clear blue sky to grow.
Pokerstars is entering India on April 17th. There online experience is far far superior than that of Adda52. Pokerstar software has features like analyzing hand histories, support for 3rd party softwares and layovers which provide you real time statistics of opponents etc.
Pokerstars will also have plethora of promotional events and offers with there deep pocket. Also it provides chance to indian poker player to play with international players (Not 100% sure of this).
Online Gambling/poker market will grow exponentially but Adda52 needs to be innovative and aggressive to defend against pokerstars onslaught. More promotional offers will hit delta’s profitability.
In international markets we have pokerstars competitors who are doing good but there products/software is also superior. All comes down to what kind of playing experience Adda52 can provide.
Things in favour of Adda52 is that Pokerstars is infamous for high Rake % (Casino’s cut in a Hand). Last i saw pokerstars Rake was 5% flat vs 3.5% - 4.5% of Adda52 depending on Stakes. Also Adda52 has been somewhat successful in beating competitions from other poker websites like pokerbazzi,Spartan poker etc.
I believe shifting to land base shall involve substantial capital expenditure and shall impact financials for a few quarters before land based casino start giving better results we should account for such disruptions
Results were pretty good as expected but the trouble has been
Lack of progress on the land-based casino policy
Status of the proposed fee hikes
Pokerstars entry
Daman casino operations
From the recent concall post results, it looks like #1 is dependant on Parrikar recovering and returning back to Goa. He is undergoing treatment in the US for advanced pancreatic cancer. It sounds as though the entire thing hangs on this one man’s pancreas which is unfortunate in more ways than one. Management thinks it should happen in the next 45 days though. Not sure how.
For #2 it looks like an appeal has been made by the casino operators and they are hopeful of a deferment, reduction or removal of the proposal. No further update on this yet though. However, management thinks that this could lead to small operators closing ops due to the high licensing fee and that it could lead to consolidation and Delta capturing a larger market share going forward.
Also, current spend on licensing fee is 39 Cr and to maintain the 4 current licenses, they propose to reduce the area of land-based casino to cut down licensing fee and think that the net-impact on the P&L will be about 30 Cr. They also would increase Entry fee - by a direct increase of Rs.200 or so (They get on avg 1100 footfalls, Rs.200 entry fee hike should add 8 Cr to the revenues) or by reducing the number of chips incl in the fee and also rationalise privileges for Club Deltin members. It looks like this cost optimisation would test the management quality.
#3, Management wants to up the ad spends for the poker business and seems to be doing so already with Q2 + Q3 ad spend at 7 Cr, while Q4 ad spend alone was 8 Cr. So we can expect margins to reduce for the fledgling online gaming business from 35-40% range to 25-30% range.
#4. Daman casino operations still remains a joker in the pack. It was one same time last year and still remains one.
2 will eventually be accommodated over a period of time.
3 needs to be monitored but all other points not a show stopper.
Uncertainty will always be there due to nature of business but if Business doesn’t shut down then one should consider the kind of cash flows that can be generated over long term 8-10 years or more and then call should be taken is what I feel.
Discl: No buying or selling in last 1year (if I remember correctly). 8-9% of PF as a long term holding (atleast for now).
I was going through the annual report of Delta Corp and some relatad party transactions with Freedom Charter Services Private Limited (FCSPL) caught my attention. FCSPL is a joint venture company of Delta Corp. It posted net losses of Rs.5 cr in FY16 and Rs. 3.1 cr in FY17. Whatever little I could understand about FCSPL on google is that it operates chartered flights.
Coming to the related party transactions, Delta Corp has given a loan of Rs. 12.61 cr in FY16 and of Rs. 13.97 cr in FY17 to FCSPL. The outstanding loan receivable from FCSPL as on 31 Mar 2017 is Rs. 66.92 cr including interest.
Further Delta Corp has also given a corporate guarantee of Rs. 35.67 cr for a loan taken by FCSPL.
It seems like Delta Corp is taking out money from its gaming and hospitality business and investing it in FCSPL, which is completely unrelated and non-core business for them.
good catch! The key question is if they own aircrafts themselves or just have planes on lease. IMO, this is an another way to keep the authorities in good humour. Also I suspect promoters using this facility for themselves. The good thing is that losses are not that big.
Adda52 has completely blown away pokerstars India. Due to entry of pokerstars they were forced to work on user experience of Mobile App and Web platform. They have been really successful in enriching user experience by bringing lot many updates. Also they have been really innovative with the promotional campaigns. Adda52 i feel will continue to rule the online poker scene in India.
I exited @250. I will be a willing buyer if prices come close to 200 again. Though i feel we might not see those levels again.
over the last many years it has traded on an average of 35-40x trailing EPS and has 500cr+ cash, some other assets like stake in Advani hotels, land in Sri Lanka etc. I think it is slightly undervalued. Finally, some movement on the land based casino policy. Policy doc could should still take one month but downside is limited if the market remains stable.
Disc: Bought back which I had exited last quarter.
Not really, the law is valid even today but hardly effective. BTW, land based casinos remain out of bound for locals in many jurisdictions like japan or Singapore. It will not matter in long run once bigger international airport opens.
During 2017-18, Delta delivered a remarkable financial performance, total revenue at Rs. 636.27 crore and Profit After Tax (PAT) at Rs. 155.55 crore. Earnings Per Share (EPS) in 2017-18 was 5.92, compared to3.19 in the year before.
Entering the gaming business in 2008, the Company has captured a lion’s share of the Indian gaming market through its five casinos in Goa and Sikkim. It owns three of the six offshore and one onshore gaming licence in the state of Goa.
The Company currently offers approximately ~1,800+ gaming positions in Goa and Sikkim.
The Company is also carving a niche in Daman through its integrated casino resort, which is awaiting regulatory approval, with approximately 1,000+ gaming positions. 5 star hotel spread in 10 acres. The resort has 27,000 sq. ft. of MICE (meeting, incentives, convention, exhibitions) space. It has 8,000 sq. ft. of high-end retail space.
Goa Offshore: Deltin Jaqk (13000 sq ft are), Deltin Caravela, Deltin Royale (40000 sq ft area)
Goa Onshore: Deltin Suites (casino 1000 sq ft)
Sikkim: Deltin Denzong
Daman: The Deltin (casino is 60000 sq ft)
We currently own and operate two properties in Goa – Deltin Suites (106 rooms) and Deltin Palms (27 rooms). We also own and operate a hotel in Daman, The Deltin (176 rooms). Moreover, we have a 33.77% stake in Advani Hotels and Resorts (India) Ltd., the holding company of Ramada Caravela Beach Resort in Goa, with no operational interest or management control.
Adda52.com has a significant poker market share of over 60% across India.We are proud to be the only Company that offers all the three games – Poker, Rummy and Fantasy League. Estimates suggest India’s mobile games market will be worth $1.1 billion by 2020 and the number of users is projected to rise to 628 million.
Deltin Royale was the proud hosting member and hosting partner of the World Poker Tour, which was organised for the first time in India.
During the year, we also signed a Memorandum of Understanding (MoU) with Everest Hospitality and Hotel Pvt. Ltd., a subsidiary of Nepalese conglomerate, MS Group, to operate a casino in the 5-star 235-room Marriott Kathmandu.
The Goa government is soon expected to announce a formal casino policy. It is likely to make it mandatory for all offshore casino operators to shift to land within three years. The state will propose to designate as an Entertainment Zone where the casinos are expected to move. Area around the new airport could be one of such option. We have acquired 100 acres of land and are looking to acquire additional approximately 50 acres of land for an entertainment destination or a recreation zone. The strategy is to build the entire ecosystem for gaming and entertainment on an asset-light model to ensure an environment favourable for increased footfall.
According to Frost & Sullivan, the Indian gaming market, estimated at $338.4 million in revenue in 2017, is expected to grow threefold in four years.
While gambling is prohibited in most parts of India, certain amendments were made to the Goa, Daman and Diu Public Gambling Act, 1976, to legalise gambling to boost tourism in these regions. Sikkim is the only other Indian state to have legalised gambling.
As per a joint report by Google India and KPMG, India’s online games industry will grow by $1 billion from the present $360 million by 2021, registering a 20% growth. Further, the Indian gaming world is expected to cover over 310 million people from the current 120 million by 2021.
Promoter share decreased from 40.69% to 33.18%. No.of shares decreased from 9,42,57,471 to 8,87,97,440. Company raised Rs. 550 cr through QIP by issuing 3.59 cr shares.
Company raised Rs. 176 cr. through issue of Preference shares. Of theses Rs. 82 cr are Redeemable Preference Shares and Rs. 94 cr are Optionally Convertible Preference Shares.
Invested in Gaussian Networks Private Limited of Rs. 290 cr. (Online gaming).
